HYIPs As Real Businesses
Hi, guys! Today I’d like to start with a short series of articles that will hopefully help you all understand clearer how the HYIP industry really works, its basics and its principles which will be based on my own many years experience in this field. I fully realize that these articles can stir some controversy but anything that might give rise to new and fresh debate can only be a good thing.
I was a witness to how the industry developed into the gigantic money making machine we saw back in 2009 when MNO became one of the most sought after sources of truthful information about online income opportunities. Now I am also an observer of the gradual decline of that same business with many people losing both their money and their faith in it. It’s very sad to see the industry in decline of course and that is true considering to what I heard from some HYIP admins stating that these days deposits into their programs are only a tiny fraction of what they used to be in previous years. Well, I can see it myself as many blogs and forums have vanished since then, and the price of ads which is amongst the best indicators of the real state of things is incredibly low. This might well have been the subject of the first article of course but I’m not going to talk about this latest HYIP recession today. It's not the first one we've seen, and in recent weeks the industry has I think started on its way to a slow recovery.
The subject of today’s post came to mind by the attempts of some admins to persuade investors that they are earning money with a real established business which of course is not true. And I’m not talking now about the ForEx investments that became so trivialized for the last few years with every second HYIP admin claiming to earn huge money there, but rather about the more sophisticated ways of trying to separate you from your cash with promises of earning big profits in casinos, silver, fish farming, sugar, etc.
I must say that the recent ways of claiming to invest into some most weirdest things in the world just make me laugh but the problem is that it can be taken seriously by some investors. A lot of people are seriously disillusioned by the current state of the HYIP industry and are then easily misled by some referral sharks trying to take advantage of that. They tell you they are helping you by guiding you away from the “traditional” HYIPs and bringing “genuine” business opportunities to help you earn online. But in reality none of these people are any better than the usual con men that are so prevalent in the industry. In no way is this helping the situation in the wider HYIP industry, only heaps more misery on investors by luring them into a false sense of community and a false sense of security only used by the most dishonest industry crooks. Acknowledging the general nature of how online HYIPs really work, going to some length to distance themselves from them, and all the while pretending to offer you an alternative which in reality is no more genuine than any of the openly “game” based HYIPs. That’s why such activities must be stopped while it’s not too late and not encouraged any further.
I have to admit that just a few years ago before I started a monitoring website I too might have considered that some HYIPs really had some outside income just based on the fact of their longevity and the fact that they were properly registered. Well, I was so wrong about that and I think a lot of others also found out the hard way when the programs they join eventually collapse. Some of the very biggest online HYIPs over the years were considered by many as real ventures but resulted in the loss of significant amounts of money by some. As for registration and the company incorporation I investigated that process myself a couple of years back, actually incorporating Money-News-Online Limited as a registered company with a serviced office, all of which cost me well under $80. It required absolutely no real personal information, in fact no serious questions were asked at all, and it gave me perfectly genuine and legal status as a company director of my own business in less than 24 hours without having to get off the couch. The whole experience did little to enhance my faith in HYIPs or their admins but I was still hopeful that due to longevity some HYIPs might still have at least some small involvement in real business ventures. For example, there was one program I used to monitor several years back called NanoMoneyCorp – it lasted for four years but still collapsed in the end, proving that previous results are no indicator of either future performance or real business interests.
The longer paying HYIPs from the days when the HYIP industry was at its peak lasted for so long because of a general upward trend in the business, combined with investors trust and ability of the majority of the more experienced players to be in profit from well-organized programs. Although this had nothing to do with the genuine sources of income from that HYIPs as they all were ponzies, i.e. were backed not by real investments but by new investments used to pay to older ones. Few admins (actually none that I can think of) have ever once backed up the claims about their alleged business activities with a single shred of evidence. Not that anyone really cares as long as things are pretty good at the time in the industry with an abundance of new investors supplying the money to pay earlier investors and more than enough left over to pay the admins.
However, let’s look at the admins that are trying to stand from this crowd and prove they are not merely running online ponzi and pyramid schemes. Is it really true? Let’s take a simple example and see.
Suppose I’m a tomato farmer and I’m a professional in my field, meaning I can grow really nice crops and deliver really good product to my local market and sell them at a profit. I heard of the HYIP industry where the website owners seem to make money out of thin air (ie your money!) so I’m entering this market to make you a tempting offer: I’m going to grow tomatoes and sell them on the market for you and share part of my profits with you in return for you financing my business. Sounds nice, right? I have everything with me to prove that I’m really growing tomatoes and sell them in my local market because it’s my hobby and nothing more. You can’t say I’m telling you lies because I will provide you with some photos of my produce and me with all the gardener’s tools in place. I can answer all your questions about the tomatoes as I’m thoroughly into the subject (if I don’t know more I can always consult Wikipedia). And you can’t blame me for anything because I really grow tomatoes for the market. The thing that you cannot prove is whether I really take the money you've invested and use it to manage my business. So I’m actually using your money for my personal needs and telling you what I know about growing tomatoes. Because it’s my hobby and I know something about it and it gives you enough comfort that you can sleep at night safe in the knowledge that your money is actually working for you in a real business.
The only thing you can’t understand is why this farmer didn’t take a loan from the local bank. It would surely be given to him provided his business plan was good and he was going to repay the loan at a vastly reduced interest rate to what he’s offering you. You are wondering why this farmer needs your money while he can find other sources from the offline world to finance his profitable business as he offers you nice returns on your investments, doesn’t he? But you try to forget about that because you think the farmer is honest. Because you were convinced by his photos and videos of him growing tomatoes accompanied by the “analysis” of a couple of referral sharks telling you that this one is different. Maybe they even believe it themselves, I don’t know.
There is nothing wrong in asking yourself such reasonable questions as you’re going to invest big money into this project which was nicely presented to you as a real venture by some established “experts”. So my tomatoes (in reality “ponzi”) business is developing nicely and I harvested some good money (sorry, tomatoes, always confusing those things!) at the end of the season. On the next season, inspired by the results and the money received from the previous venture I offer you even better returns but I will need to hire more staff and expand my business. You trust me even more new because you received your payment from the previous round. But this year was not as good as the last one. There were some unfavorable conditions affecting the crops: too much heat, too little rain, and the worst thing that I never expected – lightning from a recent storm burnt down my shed where I kept all my tools and seeds. So what to do next? Of course I will come to my dear investors to ask for help with that and might even show you some pictures of a burnt shed and ask for more money to restore my business from scratch. Your old deposits will all be nulled but I will compensate you for that by offering even higher returns for the next tomato season which will definitely be more successful than this one. And so another round will start. But perhaps I will just keep your money for myself this time. I’m bored with tomatoes now but I’ve got plenty of money. Don’t worry though, I’ll be back to you later when I come up with another real business idea.
I can go on with more story lines here than the lonely tomato farmer in urgent need of e-currencies to expand his business. But I guess you get the drill – it’s how the industry works and especially the admins who try to persuade you that they are for real but for some reason they need virtual anonymous e-currencies from you instead of getting a loan in the local bank. Why don’t they do it? Because they are aware that in the real world they will have to repay their debts and that with a real bank no excuses will be accepted and a lot more difficult questions will be asked. Posting a youtube video is simply not good enough to get money out of a real financial institution you know. So it’s easier to trick online investors who will trust the farmer and might even defend him and even protect him from the attacks later on hoping to get the portion of their money back. (“Of course it’s real” they’ll tell you, “just watch the video”. Right.)
That is why I will never stop repeating that even the most confidence inspiring HYIP admins with their photos and videos (but more often just mere words) should NOT in any case be taken seriously. I think we should really totally segregate HYIPs from real business. I can tell you with 100% certainty now that all the HYIPs are ponzies or at least ponzies for the most part. They can generate some money from their hobbies but it will be just used for their personal use. The most convenient thing for them is that they can start any number of subsequent “business opportunities” and they will always find a grateful audience because there's always some investors who just prefer being fooled by nice pictures and nice words and be hypnotized by the idea of making risk free money with no effort from thin air.
You may think I’m too harsh and you may prefer not to believe what I say. But this is exactly how things work in this industry. There will be always the admin who will try to mislead you by composing a nice fairy-tale about real business ventures which can\'t fail, and presenting them as golden opportunities which you simply cannot miss. Then after losing your money you will finally realize I was right but it will be just too late and you will be bankrupt as your money will be divided between the admins and their most loyal referral sharks. But anyone who presents you with an online HYIP that uses anonymous payment processors and tells you it’s a genuine business is either lying through their teeth or just hasn’t got a clue about what they’re talking about or how the real world works. Trust me, you’ll see that I’m right about this eventually.
That’s why I always emphasize the necessity for a potentially successful HYIP investor/ player to treat HYIPs as a form of gambling and only invest what you can afford to lose. Please do not believe in all the stories churned out on a daily basis to deceive you by dozens of HYIP admins and their cheer leaders. Believe me I was in the same position as you when I just started in this business. But the sooner you admit the fact that there is no real income in the HYIP industry, just a redistribution of funds between members, the better. Unfortunately you do need to be bit of a bit cynic in order to survive and possibly make profits in that industry.
I’m aware that it might be pretty tempting to believe such investment stories. However, at this point you should be smarter than the HYIP admins and that means that you cannot trust any HYIP which will scam you at some point anyway. Sometimes even despite the admin’s genuine best intentions failures will happen. So be ready for that and do not lose your feeling of self-security. Be on the safe side and don’t allow either the admins or their promoters to brainwash you! As you probably noticed I rarely make comments to the interviews submitted by HYIP admins nowadays, because 90% of the information usually posted is either simply not true, too good to be true, or too unverifiable to be considered as the truth. That’s why I've always preferred dealing with admins who will be straightforward with you and tell you the truth about HYIP gaming and the risks it contains. It doesn’t make it any easier to accept the losses, but at least nobody lied to you.
I always positioned myself as a “nothing to hide” and open source of info, so I do hope you enjoyed reading this article, and feel welcome to add your own opinions. Together we can help make the HYIP industry better and fairer than it is now. Please offer any suggestions you'd like to see up for discussion on future articles to my e-mail address or on my Shoutbox, and any feedback, both good and bad, is always welcome.